China Issues Warning & Guidelines Against Use Of NFTs
Crypto News: China’s stance on cryptocurrencies has long been a subject of speculation and intrigue. Long after the Chinese government banned banks from providing services linked to cryptocurrencies and clamped down on local crypto exchanges back in 2021, China’s principal national agency in charge of legal prosecution has issued a warning against the use of non-fungible tokens (NFT) and outlined a set of guidelines to be complied with.
China Says NFTs Have Crypto-Like Attributes
On Wednesday, China’s top financial watchdog — The Supreme People’s Procuratorate of the People’s Republic of China — cautioned that digital collectibles like NFT collections share “the attributes of virtual assets” which are currently banned in the country. The agency published its guidelines for the treatment of NFTs, suggesting improved risk analysis and decision-making as well as equitable penalties for offenses.
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According to the official statement released by the prosecutors, the national agency is paying close heed to the rise of NFTs in the country as it has the potential to cause financial risks, management risks, network security breaches and especially give rise to legal concerns.
Is A NFT Ban Looming In China?
With the help of NFTs, real or virtual goods can have their ownership history verified and stored on a blockchain. Chinese prosecutors, on the other hand, contend that especially with regard to digital art — which may still be copied and circulated — owners cannot truly “enjoy” their possessions. The agency was quoted as saying:
What consumers enjoy is only an exclusive right to prohibit others from tampering with the ownership of the NFT recorded on the blockchain.
However, considering its long-standing opposition to cryptocurrencies, China is reportedly showing renewed interest as it looks to use blockchain technology to expand its digital infrastructure. China recently introduced its own CBDC, which has been particularly effective.
Furthermore, the agency highlighted the fact that “as a new application of blockchain technology, NFT has certain development potential”. Therefore, it remains to be seen whether China will outright ban NFTs or seek to regulate them in a controlled manner. As the NFT market evolves and matures, global observers will keenly watch for any developments from China, as its decisions are bound to have a profound impact on the broader NFT ecosystem.
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